Exhibit 4.19


 


SUBSCRIPTION AGREEMENT


 


(for U.S.
Subscribers)


 


A completed and originally executed copy of this subscription agreement
must be delivered or transmitted by telecopier

((416) 869-9151) by no later than 12:00 noon (Toronto time) on June
1, 2004 to First Associates Investments Inc.
(Attention:  Jennifer Li).


 


	
  TO:

  	
  ADB Systems
  International Ltd. (the “Corporation”)

  
	
   

  	
   

  
	
  AND:

  	
  First
  Associates Investments Inc.

  
	
   

  	
   

  
	
  RE:

  	
  Sale of
  Convertible Notes of the Corporation entitling the holders to acquire units of
  securities of the Corporation upon conversion, each unit comprised of one
  common share in the capital of the Corporation and one-half of one Common
  Share purchase warrant.

  



 


Details of Subscription


 


The
undersigned (the “Subscriber”) hereby irrevocably subscribes, subject to the
terms and conditions set forth in this subscription agreement, for convertible
notes (“Convertible
Notes”) of the Corporation with the following specific purchase
instructions.  The particulars of the
Convertible Notes and the securities issuable upon conversion of the
Convertible Notes (together with certain other material covenants and
acknowledgements) are set out in Schedules “A” and “B” to this subscription
agreement and certain representations and warranties to be made by the
Subscriber so that the Corporation can ensure compliance with applicable
securities laws are set out in Schedule “C” to this subscription agreement, all
of which forms part of and is hereby incorporated as part of this subscription
agreement.


 


All Subscribers:


 


Complete and
sign Schedule “D” to this agreement, being the form of questionnaire and
undertaking required by the Toronto Stock Exchange


 


U.S. Subscribers:


 


Complete and
sign the U.S. Accredited Investor Certificate – Schedule “E”.


 

















 


	
  Principal Amount of Convertible Notes

  	
   

  	
   

  	
   

  
	
  Subscribed for (to be issued at par):

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name and Address of Subscriber:

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City and
  Province)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Postal
  Code)

  	
   

  
					



 


Alternate Registration Instructions (other than in the name of the Subscriber):


 


	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City and
  Province)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Postal
  Code)

  	
   

  



 


Disclosed Principal (please complete if purchasing as agent or trustee for a disclosed
principal):


 


	
   

  	
  Name

  of Principal:

  	
   

  	
   

  
	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
  Principal’s

  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City and
  Province)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Postal
  Code)

  	
   

  



 


Delivery Instructions:  The name and address
(including contact name and telephone number) of the person to whom the
certificate representing the Convertible Notes is to be delivered, if other
than the Subscriber:


 


	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Contact Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone No:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City and
  Province)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Postal
  Code)

  	
   

  



 

















 


The Subscriber
acknowledges its consent and request that this subscription agreement
(including all schedules hereto) and all other documents evidencing or relating
in any way to its purchase of Convertible Notes be drawn up in the English
language only.  Nous reconnaissons
par les présentes avoir consenti et demandé à ce que la présente convention de
souscription (et les annexes s’y rapportant) et tous les autres documents
faisant foi ou se rapportant de quelque manière à notre souscription soient rédigés
en anglais seulement.


 


IN WITNESS WHEREOF the Subscriber has executed, or caused its duly authorized
representative to execute, this subscription agreement on this
            day of
                                
, 2004.


 


	
   

  	
   

  	
   

  
	
  Signature of
  Subscriber (if an individual)

  	
   

  	
  Name of
  Subscriber (if an individual)

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
  Name of
  Subscriber (if an individual)

  	
   

  	
  (signature
  of authorized representative)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name and
  Title of Authorized Representative

  
				



 


ACCEPTANCE


 


The foregoing
is acknowledged, accepted and agreed to this
               
day of
                                
, 2004.


 


	
   

  	
  ADB SYSTEMS INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  



 

















 


SCHEDULE “A”


 


This is Schedule “A” to the subscription agreement relating to the
purchase of Convertible Notes of ADB Systems International Ltd.


 


TERMS OF THE OFFERING


 


1.             Offering.  The Convertible Notes subscribed for
hereunder form part of a larger sale by the Corporation (the “Offering”)
pursuant to an agency agreement (the “Agency Agreement”) to be entered
into between the Corporation and First Associates Investments Inc. (the “Agent”)
of a maximum of $5,000,000 principal amount of Convertible Notes. In addition
to the Offering, it is contemplated that prior to the Closing Date (as defined
below) the Corporation will be issuing up to $500,000 principal amount of
Convertible Notes to one investor, with such Convertible Notes to be the same
as the Convertible Notes under the Offering, except that they will also provide
security by way of an express assignment of insurance proceeds rights.


 


The
Convertible Notes will bear interest at an annual rate of 7% of the principal
amount of the Convertible Notes outstanding from time to time, payable
quarterly in arrears on each date that is the three month anniversary of the Closing
Date (as defined below) up to and including the third anniversary of the
Closing Date (the “Maturity  Date”).  At any time
up to and including the Maturity Date, all or any portion of the principal
amount of the Convertible Notes outstanding from time to time will be
convertible, at the option of the holder, provided that the holder complies
with the notice provision therefor, into units of securities of the Corporation
(“Units”)
at a conversion price of $0.31 per Unit (the “Conversion Price”), subject to
adjustments for stock splits, consolidations, other capital reorganizations,
extraordinary dividends or distributions.


 


Each Unit will
consist of one common share in the capital of the Corporation (a “Common Share”)
and one-half of one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
to acquire one Common Share at an exercise price of $0.50 per share, and will
be exercisable at any time prior to the fourth anniversary of the Closing Date.


 


In the event
that at any time from and after the first anniversary of the Closing Date the
volume weighted average trading price of the Common Shares through its
principal trading market for a 20 consecutive trading day period is $0.70 or
more, all then outstanding Convertible Notes, including any accrued interest
thereon, will be automatically converted into Units at the Conversion Price.


 


The material
terms of the Offering, the Convertible Notes and the Underlying Securities (as
hereinafter defined) are set out in this schedule and in Schedule “B” to this
subscription agreement.


 


The foregoing
description of the Convertible Notes is a summary only and the Subscriber
acknowledges that the definitive terms and conditions of the Convertible Notes
sold under the Offering will be set forth in the Note Certificates (as
hereinafter defined).


 


2.             Definitions.  In this subscription agreement and the
schedules to this subscription agreement the defined terms set out in the first
page of this subscription agreement or as set out in Section 1 above shall
apply and, unless the context otherwise requires:


 


“1933 Act”
means the Securities Act of 1933,
as amended, of the United States of America;


 


“Applicable
Securities Laws” means the applicable securities laws of the
Province of Ontario and each other relevant jurisdiction and the regulations
and rules made and forms prescribed thereunder, together with all applicable
instruments, published policy statements, blanket orders, notices, rulings and
rules of the Ontario Securities Commission and each other securities regulatory
authority having competent jurisdiction;


 


“Business Day”
means a day other than a Saturday, Sunday or statutory or banking holiday in
Toronto, Ontario;


 

















 


“Closing Date”
means on or about June 8, 2004, or such other date or dates as the Agent may
designate;


 


“Closing Time”
means 10:00 a.m. (Toronto time) on the Closing Date, or such other time on the
Closing Date as the Agent may designate;


 


“Corporation’s
Information Record” means any statement contained in any press
release, material change report, financial statements or other document of the
Corporation which has been or is publicly disseminated, whether pursuant to any
Applicable Securities Laws or otherwise, prior to the Closing Time;


 


“including”
means including without limitation;


 


“material”
means material in relation to the Corporation;


 


“material change”
means any change in the business, operations, assets, liabilities, ownership or
capital of the Corporation, on a consolidated basis, that would reasonably be
expected to have a significant effect on the market price or value of the
Common Shares and includes a decision to implement such a change made by the
board of directors of the Corporation or by senior management of the
Corporation who believe that confirmation of the decision by the board of
directors is probable;


 


“material fact”
means any fact that significantly affects or would reasonably be expected to
have a significant effect on the market price or value of the Common Shares;


 


“Material Subsidiaries” means the material direct
or indirect subsidiaries of the Corporation, being, ADB Systemer ASA (Norway),
ADB Systems USA, Inc. (Delaware), ADB Systems International Limited (Ireland)
and Internet Liquidators USA, Inc.;


 


“misrepresentation”
means an untrue statement of material fact, or an omission to state a material
fact that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made;


 


“Note Certificates”
means the definitive certificates representing the Convertible Notes;


 


“Purchasers”
means those persons who subscribe for Convertible Notes under the Offering,
including the Subscriber;


 


“Regulation S”
means Regulation S promulgated under the 1933
Act;


 


“TSX”
means the Toronto Stock Exchange;


 


“Underlying
Securities” means the Common Shares and Warrants comprising the
Units issuable upon the exercise of the conversion rights under the Convertible
Notes;


 


“United States”
means the United States as that term is defined in Regulation S, its territories
and possessions, any state of the United States and the District of Columbia;


 


“U.S. Person”
means a U.S. Person as that term is defined in Regulation S and, without
limiting the foregoing but for greater clarity, a U.S. Person includes any natural
person resident in the United States, any partnership or corporation organized
or incorporated under the laws of the United States, and any estate or trust of
which an executor, administrator or trustee is a U.S. Person; and


 


“Warrants Shares”
means the Common Shares issuable upon exercise of the Warrants.


 


3.             Currency.  Unless otherwise stated, all dollar amounts
referred to in this subscription agreement and the schedules thereto are
expressed in Canadian funds.


 


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4.             Representations and Warranties of the
Corporation.  The Corporation
hereby represents and warrants for the benefit of the Purchasers as follows:


 


(a)         the
Corporation is (and will be at the Closing Time) a reporting issuer in the Provinces
of Ontario, Alberta and British Columbia, and is in compliance with all
material obligations under Applicable Securities Laws of such jurisdictions;


 


(b)        the
Corporation has been duly incorporated
and organized and is validly subsisting under the laws of the
Province of Ontario
and has all requisite corporate power and authority to own its assets and to
carry on its business as currently conducted;


 


(c)         each of the Material Subsidiaries has
been duly incorporated and organized and is validly subsisting under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets;


 


(d)        the
Corporation and each of the
Material Subsidiaries is conducting its business in material
compliance with all applicable laws, rules and regulations of each jurisdiction
in which its business is carried on and is duly licensed, registered or
qualified in all jurisdictions in which it owns, leases or operates its
property or carries on business to enable its business to be carried on as now
conducted and its property and assets to be owned, leased and operated and all
such licences, registrations and qualifications are and will at the Closing
Time be valid, subsisting and in good standing, except in respect of matters
which do not and will not result in any adverse material change in respect of
the Corporation, and except for the failure to be so qualified or the absence
of any such license, registration or qualification which does not and will not
have a material adverse effect on the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the
Corporation and its subsidiaries, on a consolidated basis;


 


(e)         the
Corporation has all required corporate power and authority to enter into and
carry out the provisions of this subscription agreement and the transactions
contemplated thereby and all necessary corporate action has been taken or will
have been taken prior to the Closing Time by the Corporation to duly authorize
the execution and delivery of this subscription agreement and such other
agreements and instruments and the consummation of the transactions
contemplated thereby and so as to validly create, issue and deliver the
Convertible Notes subscribed for thereby and to validly create and irrevocably
allot for the issuance of the Underlying Securities and Warrant Shares;


 


(f)         neither
the Corporation nor any of its
Material Subsidiaries is in default or in breach in any
material respect of, and the execution and delivery of this subscription
agreement by the Corporation, the performance and compliance with the terms of
this subscription agreement, the issue and sale of the Convertible Notes, and
the issue of the Underlying Securities and Warrant Shares will not result in
any breach of, or be in conflict with or constitute a default under, or create
a state of facts which, after notice or lapse of time, or both, would
constitute a default either directly or indirectly under any term or provision
of the constating documents, by-laws or resolutions of the Corporation or any of the Material Subsidiaries
or any material mortgage, note, indenture, contract, agreement,
instrument, lease or other document to which any of them is a party or by which
any of them is bound;


 


(g)        the
Common Shares issuable upon exercise of the conversion rights under its
Convertible Notes and the Warrant Shares, if and when issued in accordance with
the Convertible Notes and Warrants, as applicable, will be validly issued and
outstanding as fully paid and non-assessable;


 


(h)        no
approval, authorization, consent or other order of, and no filing, registration
or recording with, any governmental authority is required by the Corporation in
connection with the execution and delivery or with the performance by the
Corporation of this subscription agreement except in compliance with and the
rules of the TSX;


 


(i)          to
the best of the Corporation’s knowledge, information and belief, no portion of
the Corporation’s Information Record contained a misrepresentation as at its
date of public dissemination;


 


A-3

















 


(j)          there
has been no adverse material change in relation to the Corporation since
December 31, 2003, and no adverse material fact exists in relation to the
Corporation or its securities which, in either case, has not been generally
disclosed or disclosed in the Corporation’s Information Record;


 


(k)         this
subscription agreement and all other agreements required in connection with the
issue and sale of the Convertible Notes have been or will be, at or prior to
the Closing Time, duly authorized, executed and delivered by the Corporation
and will be valid and binding obligations of the Corporation enforceable in
accordance with their respective terms (except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency or similar laws affecting
creditors’ rights generally, (ii) general equitable principles or (iii)
limitations under applicable law in respect of rights of indemnity,
contribution and waiver of contribution); and


 


(l)          the
Corporation intends that the net proceeds of the Offering will be used
substantially in the manner specified in Schedule “B” hereto.


 


5.             Reliance upon Representations, Warranties
and Covenants of the Corporation. 
The Corporation further agrees that, by delivering the Convertible Notes
to the Subscriber, the Corporation will be representing and warranting that the
representations, warranties and covenants contained in this subscription
agreement and the schedules attached thereto are true as at the Closing Time
with the same force and effect as if they had been made by the Corporation at
the Closing Time and that they will survive the purchase by the Subscriber of
the Convertible Notes and continue in full force and effect for a period of two
(2) years following the Closing Date notwithstanding any subsequent disposition
by the Subscriber of the Convertible Notes or the Underlying Securities.


 


6.             Closing of Purchase.  The Subscriber acknowledges and agrees that
delivery of and payment for the Convertible Notes will be completed at the
offices of the Corporation’s
legal counsel at 10:00 a.m. (Toronto time) on the Closing
Date which will be on or about June 8, 2004, or such earlier or later date or
time as may be determined by the Agent.


 


7.             Payment and Delivery.  The Subscriber agrees to deliver to the
Agent at 181 Bay Street, Suite 900, Toronto, Ontario M5J 2T3 (Attention:
Jennifer Li), (fax number: (416) 864-9151), prior to the Closing Time:


 


(a)         his
or her duly completed and executed subscription agreement (including Schedule
“D” and Schedule ”E”);


 


(b)        a
certified cheque or bank draft payable to “First Associates Investments Inc.”,
or wire transfer in Canadian funds to the Agent for the principal amount of
Convertible Notes subscribed for under this subscription agreement or payment
of the same amount in such other manner as is acceptable to the Agent; and


 


(c)         such
other documents as may be required pursuant to the terms of this subscription
agreement.


 


8.             Conditions of Closing.  If, by the Closing Time, the terms and
conditions contained in this subscription agreement have been complied with to
the satisfaction of the Corporation or waived by the Corporation, the Agent
shall deliver to the Corporation all completed subscription agreements,
including this subscription agreement, and deliver to the Corporation all
certified cheques or bank drafts representing subscription funds, including the
Subscriber’s subscription funds against delivery by the Corporation of the Note
Certificates and such other documentation as may be required.  This subscription is subject to acceptance
by the Corporation (as described below). 
Unless other arrangements have been made with the Agent, certificates
endorsed by the Corporation representing Convertible Notes will be available
for delivery to the Subscriber in Toronto, Ontario at the Closing Time against
payment of the aggregate purchase price for the Convertible Notes.  The Agent will deliver such certificates to
the address set out for delivery on page 2 of this subscription agreement
promptly after the closing of the Offering.


 


9.             Acceptance or Rejection.  The Corporation will have the right to
accept or reject (in whole or in part) this subscription at any time at or
prior to the Closing Time, and the right is reserved to the Corporation to
allot to any


 


A-4

















 


subscriber
less than the principal amount of Convertible Notes subscribed for.  The Subscriber acknowledges and agrees that
the acceptance of this subscription agreement will be conditional upon the sale
of the Convertible Notes to the Subscriber being exempt from any prospectus and
registration requirements of Applicable Securities Laws.  The Corporation will be deemed to have
accepted this subscription agreement upon the delivery at closing of the Note
Certificate referred to in Section 8 above in accordance with the provisions
hereof.


 


10.           Resale Restrictions.  The Subscriber understands and acknowledges
that the Convertible Notes and in certain circumstances the Underlying
Securities and Warrant Shares will be subject to certain resale restrictions
under Applicable Securities Laws and the Subscriber agrees to comply with such
restrictions.  Subscribers are advised
to consult their own legal advisors in this regard. The Subscriber also
acknowledges that it has been advised to consult its own legal advisors with
respect to applicable resale restrictions and that it is solely responsible for
complying with such restrictions (and neither the Corporation nor the Agent is
in any manner responsible for ensuring compliance by the Subscriber with such
restrictions).


 


11.           Legend.  The Subscriber acknowledges that the
following legend is to be placed on the Note Certificate (and the certificates
evidencing Underlying Securities and Warrants Shares, if issued during the four
month period referred to in such legend) being acquired:


 


“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE
                    ”
(four months and one day from the Closing Date.)


 


12.           No Revocation.  The Subscriber agrees that this offer is
made for valuable consideration and may not be withdrawn, cancelled, terminated
or revoked by the Subscriber.


 


13.           Indemnity.  The Subscriber agrees to indemnify and hold
harmless the Corporation and the Agent and their respective directors,
officers, employees, agents, advisers and shareholders from and against any and
all loss, liability, claim, damage and expense whatsoever (including, any and
all fees, costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or
investigation whether commenced or threatened) arising out of or based upon any
representation, warranty or covenant of the Subscriber contained herein or in
any document furnished by the Subscriber to the Corporation or the Agent in
connection herewith being untrue in any material respect or any breach or
failure by the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any document furnished by the Subscriber to the
Corporation or the Agents in connection herewith.


 


14.           Modification.  Neither this subscription agreement nor any
provision hereof shall be modified, changed, discharged or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.


 


15.           Compensation, Expenses and Reimbursement
Entitlements of Agent.  The
Subscriber understands that, in connection with the Offering, the Agent will
receive from the Corporation (i) aggregate commissions equal to 8% of the gross
proceeds of the Offering; and (ii) subject to the terms of the Agency
Agreement, reimbursement for the Agent’s reasonable out-of-pocket expenses and
the reasonable fees and disbursements of its legal counsel incurred in
connection with the Offering.


 


The Subscriber
further understands that as additional compensation for its services in
connection with the Offering, the Agent will receive an option, exercisable
until the second anniversary of the Closing Date, to purchase that number of
Units as is equal to 10% of the Units issuable upon full conversion of the Convertible
Notes sold under the Offering, at an exercise price equal to the Conversion
Price.


 


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16.           Miscellaneous.


 


(a)         The
agreement resulting from the acceptance of this subscription agreement by the
Corporation contains the whole agreement between the parties hereto in respect
of the subject matter hereof and there are no warranties, representations,
terms, conditions or collateral agreements, express, implied or statutory,
other than as expressly set forth herein and in any amendments hereto.


 


(b)        All
representations, warranties, agreements and covenants made or deemed to be made
by the Subscriber in this subscription agreement and the schedules thereto will
survive the execution and delivery, and acceptance, of this subscription
agreement and the closing of the Offering.


 


(c)         Time
shall be of the essence of this subscription agreement.


 


(d)        This
subscription agreement and the rights and obligations of the parties thereunder
will be governed by and construed according to the laws of the Province of
Ontario and the laws of Canada applicable therein.


 


(e)         This
subscription agreement may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document.


 


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SCHEDULE “B”


 


This is Schedule “B” to the subscription agreement relating to the
purchase of Convertible Notes of ADB Systems International Ltd. (the “Corporation”).
Capitalized terms used but not defined in this schedule are intended to have
the meanings ascribed thereto, as applicable, on the first page of this
subscription agreement and sections 1 and 2 of Schedule “A” to this
subscription agreement


 


ADB SYSTEMS INTERNATIONAL LTD.


 


Summary of Proposed Terms


 


Offering of Convertible Notes


 


by way of Private Placement


 


	
  Issuer:

  	
  ADB Systems
  International Ltd. 

  
	
   

  	
   

  
	
  Issue:

  	
  Up to
  $5,000,000 principal amount of Convertible Notes, to be issued by way of
  private placement exemptions from prospectus and registration requirements,
  subject to the receipt of any applicable regulatory and stock exchange
  approvals.

  
	
   

  	
   

  
	
  Issue Price:

  	
  The
  Convertible Notes will be issued at par in integral multiples of $1,000.

  
	
   

  	
   

  
	
  Convertible Notes:

  	
  The
  Convertible Notes will have the following material terms:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  The Convertible Notes will bear interest at an
  annual rate of 7% of the principal amount of the Convertible Notes
  outstanding from time to time, payable on the earlier of the conversion of
  the Convertible Notes or the Maturity Date (as defined below).  Interest will continue to accrue until
  paid;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  The Convertible Notes will mature and be payable on
  the date that is the third anniversary of the Closing Date (the “Maturity Date”)

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  At any time up to and including the Maturity Date,
  all or any portion of the principal amount of the Convertible Notes
  outstanding from time to time will be convertible, at the option of the holder,
  provided that the holder complies with the notice provisions therefor, into
  units of securities of the Corporation (“Units”) at a conversion price
  of $0.31 per Unit (the “Conversion Price”), subject to adjustments for stock splits, consolidations, other
  capital reorganizations, extraordinary dividends or distributions;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Each Unit will consist of one common share in the
  capital of ADB (a “Common Share”) and one-half of one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
  to acquire one Common Share at an exercise price of $0.50 per share, and will
  be exercisable at any time prior to the fourth anniversary of the Closing
  Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  In the event that at any time from and after the
  first anniversary of the Closing Date the volume weighted average trading
  price of the Common Shares through its principal trading market for a 20
  consecutive trading day period is $0.70 or more, all then outstanding
  Convertible Notes, including any accrued interest thereon, will be
  automatically converted into Units at the Conversion Price.

  
	
   

  	
   

  
	
  Use of Proceeds:

  	
  For working
  capital and general corporate purposes.

  



 

















 


	
  Minimum Subscription:

  	
  $10,000 or
  such other amount determined at the sole discretion of the Agent. The Offering
  will be marketed in such provinces of Canada as the Agent may designate and
  in which Multilateral Instrument 45-102 – Resale of Securities has been
  adopted.  Convertible Notes may also
  be offered to U.S. buyers under available exemptions from federal and state
  registration requirements in the U.S. and may also be offered in offshore
  jurisdictions.

  
	
   

  	
   

  
	
  Lock-Up:

  	
  Until 180
  days following the Closing Date, and except as provided herein, neither the
  Corporation nor any of its officers or directors may offer or announce the
  offering of, or make or announce any agreement to issue, sell or exchange
  Common Shares, warrants or securities convertible into Common Shares, except
  for the grant of stock options or the issuance of Common Shares pursuant to
  exercise of any purchase warrants existing on the date hereof, without the
  prior written consent of the Agent, such consent not to be unreasonably
  withheld.

  
	
   

  	
   

  
	
  Security:

  	
  The
  Convertible Notes will provide general security over the Corporation’s
  assets.  Such security will be
  subordinate liabilities of the Corporation to current secured creditors. 

  
	
   

  	
   

  
	
  Hold Period:

  	
  The
  Corporation will be a “reporting issuer” on the Closing Date, such that it is
  expected that the Convertible Notes, the securities comprising the Units (and
  the Common Shares issuable upon exercise of the Warrants) will have a
  restricted period of four months from the Closing Date

  
	
   

  	
   

  
	
  Listing:

  	
  The Common
  Share component of the Units (and the Common Shares issuable upon exercise of
  the Warrants) will be listed on the TSX. 

  
	
   

  	
   

  
	
  Commission:

  	
  8% of the
  gross proceeds of the Offering.  In
  addition, the Agent will receive an option, exercisable until the second
  anniversary of the Closing Date, to purchase that number of Units as is equal
  to 10% of the Units issuable upon full conversion of the Convertible Notes
  sold under the Offering, at an exercise price equal to the Conversion Price.

  
	
   

  	
   

  
	
  Agent:

  	
  First
  Associates Investments Inc.

  
	
   

  	
   

  
	
  Closing Date:

  	
  On or about
  June 8, 2004.  The Offering may be
  completed through one or more closings.

  



 


B-2

















 


SCHEDULE “C”


 


SUBSCRIBER’S REPRESENTATIONS
AND WARRANTIES


 


This is Schedule “C” to the subscription agreement relating to the
purchase of Convertible Notes of ADB Systems International Ltd. (the “Corporation”).
Capitalized terms used but not defined in this schedule are intended to have
the meanings ascribed thereto, as applicable, on the first page of this
subscription agreement and sections 1 and 2 of Schedule “A” to this subscription
agreement.


 


By executing this subscription
agreement, the Subscriber represents and warrants to the Corporation and the
Agent, which representations and warranties are true as of the date of this
subscription agreement and will be true as of the Closing Date, that:


 


1.                                       Representations and Warranties


 


(a)                                  Authorization
and Effectiveness.  If the Subscriber is a corporation, the Subscriber is a valid and
subsisting corporation, has the necessary corporate capacity and authority to
execute and deliver this subscription agreement and to observe and perform its
covenants and obligations hereunder and has taken all necessary corporate
action in respect thereof.  If the
Subscriber is a partnership, syndicate or other form of unincorporated
organization, the Subscriber has the necessary legal capacity and authority to
execute and deliver this subscription agreement and to observe and perform its
covenants and obligations hereunder and has obtained all necessary approvals in
respect thereof.  If the Subscriber is a
natural person, he or she has obtained the age of majority and is legally
competent to execute this subscription agreement and to take all actions
required pursuant thereto.


 


Whether the
Subscriber is a natural person or a corporation, partnership or other entity,
upon acceptance by the Corporation, this subscription agreement will constitute
a legal, valid and binding contract of the Subscriber, and any beneficial
purchaser for whom it is purchasing, enforceable against the Subscriber and any
such beneficial purchaser in accordance with its terms.


 


(b)                                 Residence.  The Subscriber is a
resident of, or otherwise subject to, the jurisdiction referred to under “Name
and Address of Subscriber” on the second page of this subscription agreement,
which address is the residence or place of business of the Subscriber not
created or used solely for the purpose of acquiring Convertible Notes.


 


(c)                                  Investment
Intent. 
The Subscriber is acquiring Convertible Notes to be held for investment
only and not with a view to resale or distribution.


 


(d)                                 Prospectus
Exemptions. 
The Subscriber acknowledges and agrees that the sale and delivery of the
Convertible Notes to the Subscriber is conditional upon such sale being exempt
from the requirements under Applicable Securities Laws requiring the filing of
a prospectus in connection with the distribution of the Convertible Notes.


 


(e)                                  Offering
Documents. 
The Subscriber has not received, nor does the Subscriber need to
receive, any document purporting to describe the business and affairs of the
Corporation that has been prepared for delivery to and review by prospective
investors so as to assist those investors to make an investment decision in
respect of securities being sold in a distribution of securities of the
Corporation.


 


(f)                                    No
Solicitation or Advertising.  The offer to sell the Convertible Notes was
directly communicated to the Subscriber. The Subscriber acknowledges that it
has not purchased the Convertible Notes as a result of any form of “general
solicitation” or “general advertising” as those terms are used in Rule 501 of
Regulation D promulgated under the 1933 Act,, including, but not limited to,
any advertisement, article, notice or other communication through published in
any


 

















 


newspaper,
magazine or similar media or broadcast over radio or television, or any seminar
or meeting whose attendees have been invited by “general solicitation” or
“general advertising”.


 


(g)                                 No
Undisclosed Information.  The Convertible Notes are not being
purchased by the Subscriber as a result of any material information concerning
the Corporation that has not been publicly disclosed and the Subscriber’s
decision to tender this offer and acquire Convertible Notes has not been made
as a result of any verbal or written representation as to fact or otherwise
made by or on behalf of the Corporation, or any other person and is based
entirely upon the currently available public information concerning the
Corporation.


 


(h)                                 Investment
Suitability.  The Subscriber has such knowledge and experience in financial and
business affairs as to be capable of evaluating the merits and risks of the
investment hereunder in Convertible Notes (and the Underlying Securities in
respect thereof) and is able to bear the economic risk of loss of such
investment.  The Subscriber acknowledges
and agrees that the Subscriber is responsible for obtaining such legal advice
as the Subscriber considers appropriate in connection with the execution,
delivery and performance by the Subscriber of this agreement and the transactions
contemplated hereunder.


 


(i)                                     Subscription
Agreement. 
The Subscriber has read and understands the contents of this agreement
and agrees to be legally bound hereby.


 


(j)                                     No
Registration Under the 1933 Act.  The Subscriber understands that the issuance
of the Convertible Notes provided for in the subscription agreement is intended
to be exempt from registration under the 1933 Act, by virtue of
Section 4(2) thereof and Rule 506 of Regulation D promulgated under
the 1933 Act.  The Subscriber
acknowledges that none of the Convertible Notes, Underlying Securities or
Warrant Shares have been or may ever be registered under the 1933 Act or the
securities laws of any state of the United States by reason of their issuance
in a transaction that does not require registration under the 1933 Act (based
in part on the representations and warranties of Subscriber contained herein)
and that the Convertible Notes, Underlying Securities and Warrant Shares may
not be offered or sold, directly or indirectly, in the United States except
pursuant to registration under the 1933 Act and the securities laws of all
applicable states or an available exemption therefrom, and the Corporation has
no obligation or present intention of filing a registration statement under the
1933 Act in respect of any of the Securities. 
As a result of the foregoing, the Subscriber may be required to bear the
economic risk of its investment for an indefinite period of time.


 


(k)                                  No
Exercise of Warrants by U.S. Person.  The Subscriber acknowledges that the
Convertible Notes may not be exercised or deemed exercised by or on behalf of a
U.S. Person or a person in the United States unless an exemption is available
from the registration requirements of the 1933 Act and the securities laws of
all applicable states, and the holder has, unless waived by the Corporation and
the Agent, furnished an opinion of counsel satisfactory to the Corporation and
the Agent to such effect; provided that a Subscriber who delivers the U.S.
Accredited Investor Certificate attached as Schedule “E” hereto in connection
with its purchase of Convertible Notes and the Warrants pursuant to the
Offering will not be required to deliver an opinion of counsel in connection
with the due exercise or deemed exercise of the Convertible Notes and the
Warrants at a time when the representations, warranties and covenants made by
the Subscriber therein are true and correct.


 


(l)                                     Not
a Broker-Dealer. The Subscriber is neither a
registered broker-dealer nor an affiliate of a registered broker-dealer.


 


(m)                               Primary Purpose. The Subscriber has not been created or is not being used primarily
to permit the purchase of the Convertible Notes, Underlying Securities or
Warrant Shares.


 


2.                                       Reliance
Upon Representations, Warranties and Covenants. The Subscriber acknowledges that the representations and
warranties contained herein are made by the Subscriber with the intention that
they may


 


C-2

















 


be
relied upon by the Corporation in determining the Subscriber’s eligibility to
purchase Convertible Notes under Applicable Securities Laws.  The Subscriber agrees that by accepting
delivery of the Convertible Notes on the Closing Date, the Subscriber will be
representing and warranting that the foregoing representations and warranties
are true and correct as at the Closing Time with the same force and effect as
if they had been made by the Subscriber at the Closing Time and that they will
survive the purchase by the Subscriber of Convertible Notes and will continue
in full force and effect notwithstanding any subsequent disposition by the
Subscriber of such Convertible Notes.


 


3.                                       Personal
Information.  The Subscriber acknowledges
and consents to the fact that the Corporation and the Agent are collecting the
Subscriber’s personal information for the purpose of fulfilling this
subscription agreement.  The subscriber
further acknowledges and consents to the fact that the Corporation may be
required by Applicable Securities Laws to provide the applicable regulatory
authorities with any personal information provided by the Subscriber in
accordance with and for the purposes required under Applicable Securities Laws.


 


C-3

















 


SCHEDULE “D”


 


THE TORONTO STOCK EXCHANGE


 


PRIVATE PLACEMENT QUESTIONNAIRE AND
UNDERTAKING


 


QUESTIONNAIRE


 


1.                                       DESCRIPTION OF TRANSACTION


 


(a)                                  Name
of Issuer of the Securities:


 


ADB Systems
International Ltd. (the “Issuer”)


 


(b)                                 Number
and Class of Securities to be Purchased:


 


$
                         
principal amount of convertible Notes of the Issuer (“Notes”).  The Notes are convertible, at the option of
the holder, into units of securities of the Issuer, (“Units”)
at conversion price of $0.31. Each Unit will be comprised of one common share
in the capital of the Corporation (a “Common Share”) and one-half of
one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
to acquire one Common Share at an exercise price of $0.50 per share, and will
be exercisable at any time prior to the fourth anniversary of the Closing Date.


 


(c)                                  Purchase
Price: The Notes are being issued at par.


 


2.                                       DETAILS OF PURCHASER


 


(a)                                  Name
of Purchaser: 


 


(b)                                 Address:



 


(c)                                  Names
and addresses of persons having a greater than 10% beneficial interest in the
purchaser:


 


 


 


 


3.                                       RELATIONSHIP TO ISSUER


 


(a)                                  Is
the purchaser (or any person named in response to 2(c) above) an insider of the
Issuer for the purposes of the Securities
Act (Ontario) (before giving effect to this private placement)? If
so, state the capacity in which the purchaser (or person named in response to
2(c)) qualifies as an insider.


 


 


 


(b)                                 If
the answer to (a) is “no”, are the purchaser and the Issuer controlled by the
same person or company? If so give details


 


 


 

















 


4.                                       DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER


 


Give details
of all trading by the purchaser, as principal, in the securities of the Issuer
(other than debt securities which are not convertible into equity securities),
directly or indirectly, within the 60 days preceding the date hereof.


 


 


 


 


D-2

















 


UNDERTAKING


 


TO:                                    THE TORONTO STOCK EXCHANGE


 


The
undersigned has subscribed for and agreed to purchase, as principal, the
securities described in Item 1 of this Private Placement Questionnaire and
Undertaking.


 


The
undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of
four months from the date of the closing of the transaction herein or for such
period as is prescribed by applicable securities legislation, whichever is
longer, without the prior consent of the Toronto Stock Exchange and any other
regulatory body having jurisdiction.


 


DATED at
                                
this                
day of
                                
, 2004.


 


	
   

  	
   

  
	
   

  	
  (Name of
  Purchaser – please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Authorized
  Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Official
  Capacity – please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (please
  print here name of individual whose signature appears above, if different
  from name of purchaser printed above)

  



 

















 


SCHEDULE “E”


 


U.S. ACCREDITED INVESTOR CERTIFICATE


 


The Subscriber
understands and agrees that the Convertible Notes, Underlying Securities and
the Warrant Shares (collectively, the “Securities”) have not been and
will not be registered under the United States Securities Act of 1933, as
amended (the “1933
Act”), or applicable state securities laws, and the Convertible
Notes are being offered and sold on behalf of the Corporation, by the Agent
through a U.S. affiliate (the “U.S. Affiliate”) to the Subscriber in reliance upon Rule 506
of Regulation D under the 1933 Act. 
Capitalized terms used in this Schedule “E” and defined in the
Subscription Agreement to which this Schedule “E” is attached have the meanings
defined in such Subscription Agreement unless otherwise defined in this
Schedule “E”.


 


The
undersigned represents, warrants and covenants (which representations,
warranties and covenants shall survive the Closing Date) to the Corporation,
the Agent and the U.S. Affiliate (and acknowledges that the Corporation,
the Agent and the U.S. Affiliate are relying thereon)  that:


 


	
   

  	
   

  	
  (a)

  	
  it is
  purchasing the Convertible Notes for its own account for investment purposes
  only, and not with a view to any resale or distribution and, in particular,
  it has not sold, offered, distributed or otherwise disposed of any of the
  Securities and has no intention to sell, offer, distribute or otherwise
  dispose of, either directly or indirectly, any of the Securities in the
  United States; provided, however, that this paragraph shall not restrict the
  Subscriber from selling, offering, distributing or otherwise disposing of any
  of the Securities pursuant to the registration thereof under the 1933 Act and
  any applicable state securities laws or pursuant to an exemption from such
  registration requirements;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  it, and if
  applicable, each person for whose account it is purchasing the Convertible
  Notes satisfies one or more of the categories of “accredited investor”
  indicated below (the Subscriber must check the appropriate line(s)):

  



 


	
  o

  	
   

  	
  Category 1.

  	
  A bank, as
  defined in Section 3(a)(2) of the 1933 Act, whether acting in its individual
  or fiduciary capacity; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 2.

  	
  A savings
  and loan association or other institution as defined in Section 3(a)(5)(A) of
  the 1933 Act, whether acting in its individual or fiduciary capacity; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 3.

  	
  A broker or
  dealer registered pursuant to Section 15 of the United States Securities
  Exchange Act of 1934, as
  amended; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 4.

  	
  An insurance
  company as defined in Section 2(13) of the 1933 Act; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 5.

  	
  An
  investment company registered under the United States Investment Company Act of 1940;
  or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 6.

  	
  A business
  development company as defined in Section 2(a)(48) of the United States Investment
  Company Act of 1940; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 7.

  	
  A small
  business investment company licensed by the U.S. Small Business
  Administration under Section 301 (c) or (d) of the United States Small
  Business Investment Act of 1958; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 8.

  	
  A plan
  established and maintained by a state, its political subdivisions or any
  agency or instrumentality of a state or its political subdivisions, for the
  benefit of its employees, with total assets in excess of U.S. $5,000,000; or

  



 

















 


	
  o

  	
   

  	
  Category 9.

  	
  An employee
  benefit plan within the meaning of the United States Employee Retirement Income Security
  Act of 1974 in which the investment decision is made by a plan
  fiduciary, as defined in Section 3(21) of such Act, which is either a bank,
  savings and loan association, insurance company or registered investment
  adviser, or an employee benefit plan with total assets in excess of U.S.
  $5,000,000 or, if a self-directed plan, with investment decisions made solely
  by persons who are accredited investors; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 10.

  	
  A private
  business development company as defined in Section 202(a)(22) of the United
  States Investment
  Advisers Act of 1940; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 11.

  	
  An
  organization described in Section 501(c)(3) of the United States Internal
  Revenue Code, a corporation, a Massachusetts or similar business
  trust, or a partnership, not formed for the specific purpose of acquiring the
  securities offered, with total assets in excess of U.S. $5,000,000; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 12.

  	
  Any director
  or executive officer of the Corporation; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 13.

  	
  A natural
  person whose individual net worth, or joint net worth with that person’s
  spouse, at the date hereof exceeds U.S.$1,000,000; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 14.

  	
  A natural
  person who had an individual income in excess of U.S.$200,000 in each of the
  two most recent years or joint income with that person’s spouse in excess of
  U.S.$300,000 in each of those years and has a reasonable expectation of
  reaching the same income level in the current year; or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 15.

  	
  A trust,
  with total assets in excess of U.S.$5,000,000, not formed for the specific
  purpose of acquiring the securities offered, whose purchase is directed by a
  sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act;
  or

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Category 16.

  	
  Any entity
  in which all of the equity owners meet the requirements of at least one of
  the above categories;

  



 


	
   

  	
   

  	
  (c)

  	
  it
  understands and agrees that the certificates representing the Warrants and
  all certificates issued in exchange therefor or in substitution thereof,
  shall bear the following legends:

  



 


	
   

  	
   

  	
   

  	
  “THIS
  WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
  ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE EXERCISED BY OR ON BEHALF
  OF ANY U.S. PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
  OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT AND UNDER
  APPLICABLE STATE SECURITIES LAWS OR ADB SYSTEMS INTERNATIONAL LTD. SHALL HAVE
  RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION OF SUCH
  SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF APPLICABLE FEDERAL AND
  STATE SECURITIES LAWS IS NOT REQUIRED.”

  



 


	
   

  	
   

  	
   

  	
  provided,
  that if the Warrants are being sold outside the United States in compliance
  with Rule 904 of Regulation S under the 1933 Act, at a time when
  the Issuer is a “foreign issuer” as defined in Rule 902 under the 1933
  Act, the legend set forth above may be removed at the time of sale by
  providing a declaration to the Corporation in the form attached hereto as
  Appendix A or as the Corporation may from time to time prescribe;

  



 


E-2

















 


(d)                                 it
understands that upon the issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the 1933 Act or
applicable U.S. state laws and regulations, the certificates representing the
Common Shares and Warrant Shares, and all securities issued in exchange
therefor or in substitution thereof, will bear a legend in substantially the
following form:


 


“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS.  THESE SECURITIES MAY BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ENCUMBERED ONLY
(A) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S
PROMULGATED UNDER THE 1933 ACT, (B) IN COMPLIANCE WITH THE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (C) IN A TRANSACTION THAT IS OTHERWISE EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND ANY APPLICABLE STATE LAWS, AND
THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF
COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY
TO THE COMPANY.  DELIVERY OF THIS CERTIFICATE
MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA.  IF THESE
SECURITIES ARE BEING SOLD AT ANY TIME THE COMPANY IS A “FOREIGN ISSUER” AS
DEFINED IN RULE 902 UNDER THE 1933 ACT, A NEW CERTIFICATE, BEARING NO LEGEND,
THE DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY” MAY BE OBTAINED FROM THE
COMPANY’S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN FORM SATISFACTORY TO THE COMPANY AND THE COMPANY’S TRANSFER
AGENT TO THE EFFECT THAT THE SALE OF THE SECURITIES IS BEING MADE IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.”


 


provided, that if the Common Shares and Warrant Shares
are being sold under clause (B) above, at a time when the Corporation is a
“foreign issuer” as defined in Rule 902 under the 1933 Act, the legend set
forth above may be removed at the time of sale by providing a declaration to
the Corporation and its transfer agent in the form attached hereto as
Appendix A or as the Corporation may from time to time prescribe, to the
effect that the sale of the securities is being made in compliance with Rule
904 of Regulation S under the 1933 Act; provided further, that if any of the
Common Shares or Warrant Shares are being sold pursuant to Rule 144 of the 1933
Act and in compliance with any applicable state securities laws, the legend may
be removed by delivery to the Corporation’s transfer agent of an opinion
satisfactory to the Corporation to the effect that the legend is no longer
required under applicable requirements of the 1933 Act or state securities
laws;


 


(e)                                  it
agrees not to offer, sell or otherwise transfer any of the Convertible Notes or
Warrant Shares except as permitted by paragraph (c) or (d), above, as
applicable, and the legend(s) included therein;


 


E-3

















 


(f)                                    it
has had the opportunity to ask questions of and receive answers from the
Corporation regarding the investment, and has received all the information
regarding the Issuer that it has requested;


 


(g)                                 it
consents to the Corporation making a notation on its records or giving
instruction to the registrar and transfer agent of the Issuer in order to
implement the restrictions on transfer set forth and described herein;


 


(h)                                 it
understands and acknowledges that the Corporation has no obligation or present
intention of filing with the United States Securities and Exchange Commission
or with any state securities administrator any registration statement in
respect of resales of the Securities in the United States;


 


(i)                                     the
office or other address of the Subscriber at which the Subscriber received and
accepted the offer to purchase the Convertible Notes is the address listed as
the “Address of Subscriber” on the second page of the Subscription Agreement;


 


(j)                                     it
understands and agrees that there may be material tax consequences to the
Subscriber of an acquisition, disposition or exercise of any of the Securities;
neither the Corporation, the Agent nor any U.S. affiliate gives any opinion or
makes any representation with respect to the tax consequences to the Subscriber
under United States, state, local or foreign tax law of the undersigned’s
acquisition or disposition of such Securities; in particular, no determination
has been made whether the Issuer will be a “passive foreign investment company”
(“PFIC”) within the meaning of Section 1291 of the United States Internal
Revenue Code;


 


(k)                                  it
understands and acknowledges that the Corporation is not obligated to remain a
“foreign issuer”;


 


(l)                                     it
understands and agrees that the financial statements of the Corporation have
been prepared in accordance with Canadian generally accepted accounting
principles, which differ in some respects from United States generally accepted
accounting principles, and thus may not be comparable to financial statements
of United States companies; and


 


(m)                               it
understands that none of the Convertible Notes, the Underlying Shares or the
Warrant Shares have been recommended by any federal or state securities
commission or regulatory authority. 
Furthermore, the foregoing authorities have not confirmed the accuracy
or determined the adequacy of the information in the subscription agreement or
the schedules attached thereto.  Any
representation to the contrary is a criminal offense.


 


The Subscriber
undertakes to notify the Corporation immediately of any change in any
representation, warranty or other information relating to the Subscriber set
forth herein which takes place prior to the Closing Date.


 


	
  If a
  Corporation, Partnership or Other Entity:

  	
   

  	
  If an
  Individual:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    Name of Entity

  	
   

  	
    Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    Type of Entity

  	
   

  	
    Print or Type Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    Signature of Person Signing

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    Print or Type Name and Title of Person
  Signing

  	
   

  	
   

  



 


E-4

















 


Appendix A to


 


Schedule “E” – U.S. Accredited
Investor Certificate


 


FORM OF DECLARATION FOR REMOVAL
OF LEGEND


 


TO:         Registrar and transfer agent for the
Common Shares, Warrant Shares and Warrants of ADB SYSTEMS INTERNATIONAL LTD. (the
“Issuer”):


 


The
undersigned (A) acknowledges that the sale of the securities of the Issuer to
which this declaration relates is being made in reliance on Rule 904 of
Regulation S under the United States Securities Act of 1933, as amended (the
“1933 Act”), and (B) certifies that: 
(1) the undersigned is not an “affiliate” of the Issuer (as that term is
defined in Rule 405 under the 1933 Act); (2) the offer of such securities was
not made to a person in the United States and either (a) at the time the buy order
was originated, the buyer was outside the United States or the seller and any
person acting on its behalf reasonably believed that the buyer was outside the
United States, or (b) the transaction is being executed on or through the
facilities of the Toronto Stock Exchange or the TSX Venture Exchange or any
other designated offshore securities market as defined in Regulation S under
the 1933 Act and neither the seller nor any person acting on its behalf knows
that the transaction has been prearranged with a buyer in the United States;
(3) neither the seller nor any affiliate of the seller nor any person
acting on their behalf has engaged or will engage in any directed selling
efforts in the United States in connection with the offer and sale of such
securities; (4) the sale is bona fide and not for the purpose of “washing
off” the resale restrictions imposed because the securities are “restricted
securities” (as that term is defined in Rule 144(a)(3) under the 1933
Act); (5) the seller does not intend to replace such securities with
fungible unrestricted securities; and (6) the contemplated sale is not a
transaction, or part of a series of transactions, which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the registration
provisions of the 1933 Act. Terms used herein have the meanings given to them
by Regulation S under the 1933 Act.


 


Dated
                                                                ,
200         .


 


 


	
   

  	
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  Signature of
  individual (if Holder is an individual)

  
	
   

  	
   

  	
   

  
	
   

  	
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  Authorized
  signatory (if Holder is not an individual)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of
  Holder (please
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  Name of
  authorized signatory (please print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Official
  capacity of authorized signatory

  (please
  print)